CareFirst BlueCross BlueShield has requested a rate reduction of more than 20 percent on Maryland’s individual market following federal approval of the state’s reinsurance program, the latest sign that the gambit to stabilize the market is paying off.
In new filings, CareFirst, the state’s largest insurer, has asked state regulators to approve average premium decreases of 22.3 percent on its HMO products. It had asked for a rate increase of 18.5 percent before the state’s innovation waiver to create a reinsurance program was approved.
On its PPO products on the individual market, CareFirst has asked for an average 17.7 percent rate increase following the waiver’s approval. In May the insurer had asked for average 91.4 percent increases. These products have significantly fewer members than the HMO products and these members tend to be sicker.
In earlier revised filings, Kaiser Permanente, the state’s other individual market insurer, had asked for average rate decreases of 5.7 percent.
The Maryland Insurance Administration will hold a hearing Monday to discuss the new rates. It is expected to release its final approval of rates shortly thereafter.
The rates filed by the insurers are almost certain to change. The insurers, the regulator and third-party actuaries all have different methods of calculating the rates, including different methods of adjusting for risk adjustment payments. Those changes could result in some variation, but the trend points toward meaningful decreases because of the reinsurance waiver.
Before the reinsurance waiver was approved, Maryland’s insurers on the individual market looked to continue raising rates by double digits amid increasing instability. Last year, state insurance commissioner Al Redmer approved rate increases of 34.5 percent and 50 percent for CareFirst’s HMO and PPO products, respectively, and 22.5 percent for Kaiser’s products. (These rates were later increased only for silver level plans to account for the federal government’s decision to end cost-sharing reduction subsidies.)
After those significant premium increases last year, the state sought to keep that from happening again in 2019 by asking the federal government for permission to set up a reinsurance program. Reinsurance programs lower premiums by reimbursing insurers for members with high claims costs. The program received approval last month.
It comes with an estimated $380 million in funding that state officials believe creates the largest reinsurance pool in the country. That pool is funded by a state assessment on health insurers that is normally assessed federally but was laid aside for next year as part of tax reform legislation.
The lower filings by CareFirst and Kaiser demonstrate that the state’s bid to shore up the individual market appears to be working. But that solution has only been considered a temporary fix.
Tuesday, the state will start looking for long-term solutions when the Health Insurance Coverage Protection Commission meets for the first time this year in Annapolis. That commission will look for options to drive premiums down even further and try to get people who remain priced out of the insurance market back into the pool.